Whether you’re creating a trust, a will, or a power of attorney, your estate plan will rely upon fiduciaries to carry out your wishes. A fiduciary is someone who owes you, the principal, a legal duty to act in your best interests. Someone who has a fiduciary duty cannot use the position to take advantage of you or otherwise do anything that would harm you.

However, just because that legal duty exists doesn’t mean you can grant fiduciary authority to anyone and be sure that they will do the right thing. When it comes to selecting a fiduciary, here are several tips you might want to consider.

Tip 1. Don’t feel compelled to choose family.

A lot of people who create estate plans choose a close family member to act as their agent, executor, or to serve as the trustee of a trust. While this is often a wise choice, you shouldn’t feel obligated to choose family members for these roles. Trusted friends and professional advisors can all act as your fiduciary. In some situations, such as when you hire an attorney or an accountant, it’s often preferable to have someone who is not related to you.

Tip 2. Consider the practical limitations.

Fiduciaries should be people you trust, but they should also be people who are able to meet their duties. Don’t choose fiduciaries who are located too far away from you if the position requires them to act locally. Also, be sure to choose someone who recognizes his or her own limitations and who will seek appropriate advice when necessary.

You can learn a lot more about different fiduciaries involved in estate planning at one of our free estate planning seminars. The next seminars will be on July 23, 24th, and 25th in Grand Forks, North Dakota and Thief River Falls, Minnesota. Contact our office for details and registration information.

Raymond J. German, LTD. is a member of the American Academy of Estate Planning Attorneys.

With the legal status of her estate still in limbo, many of the possessions owned by former copper heiress Huguette Clark will be sold in what may be one of the more valuable estate sales of recent memory. Ms. Clark inherited an estimated $400 million fortune as the sole heir of Gilded Age mining magnate William Clarke. Though she spent the last several decades of her life living in a New York hospital room, Ms. Clarke left behind some very valuable apartments in New York that had been unoccupied for decades.

The three apartments are all located in the same building located at the corner of Fifth Avenue and 72^nd St. in New York, overlooking the Central Park sailboat pond where E.B. White set his “Stuart Little” story. The apartments, occupying about 50,000 square feet, have been untouched for years. One of them even has a telephone with an exchange number written on the phone as “Butterfield 8.” Though they apparently require some substantial renovations, they are being listed for an asking price of $55 million. Another property Ms. Clark owned in Santa Barbara, California is estimated to be worth $100 million, while a Connecticut home is listed for $24 million.

The estate is also selling several jewelry pieces owned by Ms. Clark, though few have been worn by her since the 1930s and had been sequestered in a safety deposit box in bank vault since then. The auction house Christie’s is selling the pieces in April, with some of the more valuable diamond rings estimated to be worth anywhere between $2 and $8 million.

Raymond J. German, LTD. is a member of the American Academy of Estate Planning Attorneys.

If you’ve ever done estate planning, you deserve a pat on the back.  It may surprise you to know that about half of the people in the United States, don’t have an estate plan.  It’s shocking, really, because all adults need their own estate plan.  So,  you’re off to a great start; but, there are 7 things you may have forgotten since you did your estate planning.

Have you forgotten that you need to update your estate plan everyone to three years?  Yes, your needs, the law, and your attorney all change so your estate plan needs to change as well.

• And, remember that if you go through a divorce, get married, have a baby, adopt a child, start a business, or move to a new state, you need to update then as well.

• Oh, and have you remembered to fund your revocable living trust and title newly acquired assets in the name of your trust as well?  You need to do this so that your estate plan works, meaning it does what you want it to do.

• Have you remembered to chat with your loved ones about your estate plan, introduce them to your estate planning attorney, and show them where you keep your estate planning documents and other important papers?

• Have you thought to update your list of assets and jot down up to date account number with usernames and passwords?  Include your PINs too.

• Perhaps, most importantly, please remember to write “I Love You” letters to your loved ones.  This is truly the best inheritance of all.

• Did you think to ask your trusted helpers’ permission when naming them in your estate planning documents?  Trusted helpers are your primary and contingent executor, trustees, guardians for minor children, and agents under powers of attorney.

Raymond J. German, LTD. is a member of the American Academy of Estate Planning Attorneys.

Everyone wants an estate plan that works, but most people don’t realize that many estate plans don’t actually work.  Estate plans don’t work when they don’t do what the creator of the plan wanted it to do.

Suzy’s Story of an Estate Plan that Doesn’t Work

Suzy names Brady as the guardian for her minor children if she becomes incapacitated during her lifetime and cannot care for them. Brady is a great family friend and loves Suzy’s children.  Suzy and Brady share values regarding life, education, money, and family.  It’s appears to be a good fit.  But, Suzy never asks Brady for permission to name him.

Suzy suffers head injury in a car accident and is a coma; her recovery is expected to take at least 2 years as she needs to relearn how to walk, speak, feed herself, dress herself, and otherwise function.  Brady is called upon to serve as guardian, but he is suffering from depression, considering moving out of the area, and is unemployed.  He declines to serve.  No backup guardians have been named.

The children are placed into foster care until Suzy is able to regain capacity to care for her children.  This is not what she planned, her plan didn’t work

The Basics to Best Ensuring that Your Plan Works

• Before you name anyone in a role of trusted helper such as guardian, trustee, executor, or agent, always ask permission first.
• Always name one or two back up trusted helpers for each role.
• Communicate with your loved ones so that they know your wishes and can locate your estate planning documents quickly when needed.
• Update your estate plan every one to three years (or earlier if something major changes in your life.)
• Create your estate plan with the guidance of a qualified estate planning attorney

Raymond J. German, LTD. is a member of the American Academy of Estate Planning Attorneys.

A recent South Dakota Supreme Court case highlights the necessity of appointing a competent and honest executor/ personal representative.  On July 27, 2011, the South Dakota Supreme Court released its opinion in Muhlbauer v. Estate of Olson, wherein the executor (known as “personal representative”) sold real estate specifically devised to heirs.  The Supreme Court held that the buyers of the real estate were good faith purchases for value and were, thereby, protected by statute.

What this Means for the Decedent, Glenn Olson

The bottom line is that Glenn’s wishes were not carried out.  Explicit instructions were included in his will, devising his real property to his heirs.

The executor failed to follow the instructions.

What this Means for the Beneficiaries

The bottom line for the beneficiaries is that they don’t get the real estate that Glenn wished them to have.  They have a legal recourse.   The beneficiaries can sue the executor for their loss, as an executor is personally liable for negligence and mistakes.

Lessons Learned from the Muhlbauer Case

It is imperative that an honest and competent executor is chosen if you want your wishes to be carried out.

It is helpful to fully understand executor duties before naming a trusted loved one to this role.  In addition, it is imperative that the executor be willing to seek and follow professional legal guidance from a qualified estate planning – probate attorney.

Executor Duties

• Collecting, protecting, valuing, and managing all assets.
• Following the instructions in the will.
• Following all instructions of the probate court.
• Paying last bills.
• Communicating with beneficiaries.
• Seeking and following advice from professional advisors such as the estate planning – probate attorney, as needed.
• Filing all appropriate tax returns.
• Distributing assets to beneficiaries pursuant to the will upon the acceptance of the tax returns.

Where to Get More Help

Make sure that your appointed executor actually wants to serve.  Ask before appointing.  If you need assistance choosing an executor, or if you have other estate planning and probate questions, consult with a qualified estate planning – probate attorney.

Raymond J. German, LTD. is a member of the American Academy of Estate Planning Attorneys.